Shipbuilding's importance to Korea

Monday, May 12, 2014

Shipbuilding has been at the heart South Korea’s economic development over the past few decades, playing a leading role in bringing its people out of poverty.

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In 1960 South Korea had 25% unemployment and in 1962, prior to the launch of its first five-year plan, had an income per capita of just $87. By 2010, South Korea’s per capita income had risen to just under $21,000, an impressive economic turn aided by its transformation into a shipbuilding giant.

Tradition and growth

The country’s first modern shipyard was opened by Hyundai Heavy Industries in 1973 (its first president was a Dane, Kurt JW Schou) and shipbuilding became a central feature of the nation’s five-year plan launched later that year.
Shipbuilding capacity in South Korea grew from 190,000 gross tonnes in 1971 to 1.3 mil gross tonnes by 1976. In 2011, the nation built 13 million gross tonnes of ships for a total value of $565.5 billion, making it the nation’s number one export industry representing over 15% of Korea’s total exports, just ahead of the semi-conductor industry.
Currently, DSME has some 13,000 direct employees and nearly 29,000 sub-contractors in the town, and the capacity to build 70 commercial vessels, four offshore drillships and two submarines a year. In the town of Okpo, with total population of around 275,000 people, it is a fair assumption that almost every family has at least one member that banks a DSME signed paycheque each month, and more members who work in businesses indirectly connected to yard.

A family business

Mr. Yang, a native of Busan, is a good example. He worked at another shipyard before joining DSME. The 60-year-old is currently a machinery out-fitter, and has been working on the propellers and main engines of the Triple-E vessels.

“Working on a bigger ship is harder because of the different size, but we take a lot of pride in what we are doing. Yet you also have to take a lot of precautions and work very precisely, and with a lot of detail – which means concentrating on the details.

“That’s the main challenge – getting the job done precisely and not letting the team down,” he says.

His son, 40-year-old JH Yang joined DSME in 1998 and initially worked on one of the huge Goliath gantry cranes, but recently transferred to a smaller crane handling loads of 60-70 tonnes. BH Yang’s wife and daughter have also held positions at the shipyard – his wife was in one of the hull painting teams while his daughter was the secretary to the chief procurement officer for a period.

“My father worked at different shipyards, and I followed him. And since then I have grown up as this company has grown up,” says the younger Yang, who has a 15 year-old son and a 11-year old daughter, both of which he would welcome if they decided to follow in his footsteps, just as he did with his father.

Local impact

Take a walk down any street in the town of Okpo and the all-grey DSME uniforms are everywhere, most of them Koreans, mixing with some 26,000 expatriates working in the town for a variety of companies somehow linked to the shipbuilding industry.

“There is more opportunity here compared to other non-shipbuilding cities for people to open their own businesses,” said a waitress at Le Bistro, a restaurant run by her family on the street that the expatriates have nicknamed ‘Beverley Hills St’ because of the variety of shops.

“Most of the bars and restaurants here would close if the shipyard wasn’t here,” she said.

One man who has seen the changes take place in Korea is the Triple-E site office manager, Maersk Maritime Technology’s Søren Arnberg, who first arrived in 1988. “At that time, the yard was relatively new to building container ships, and the town the town was rather poor,” he says.

“Today DSME is a quite a technically competent yard and they bring a lot of their own ideas to the table which makes for a good partnership,” says Arnberg. “Their growth has certainly played a big role in bringing business to the area as we can see with the development in and around Okpo in the past 20 years,” he says.

A.P. Moller - Maersk

A.P. Moller - Maersk is an integrated transport and logistics company with multiple brands and is a global leader in container shipping and ports. Including a stand-alone Energy division, the company employs roughly 88,000 employees across operations in 130 countries.